The Hellenic Federation of Enterprise, Greece’s biggest business group, said increasing losses for holders of Greek debt to as much as 50 percent would do “great damage to Greece and place Europe at great risk.”
Increasing losses from 21 percent agreed at a July 21 European Union summit would have little impact on net Greek debt reduction and a great impact on the economy, growth and investments, the Athens-based organization said in an e-mailed statement today, citing a study it conducted last month.
European Union officials are weighing deeper losses for Greek bondholders in a revamp of the July accord that provided bondholders with a 21 percent loss in a voluntary swap.
The federation said a 50 percent writedown would be imposed on about 201.9 billion euros ($281 billion) of eligible Greek debt, after removing the 78 billion euros of loans from the EU and International Monetary Fund, 62 billion euros held by the European Central Bank, and 23.7 billion euros of Treasury bills and securitised loans.
The writedown would result in a debt of 101 billion euros. The organization calculates 40 billion euros would be needed to recapitalise banks and another 13 billion euros for pension funds, while the Bank of Greece would have a loss of 3.4 billion euros and insurance companies another 1 billion euros. The net benefit of a 50 percent cut would be 43.6 billion euros, according to the group.
“The Greek government must fight to avoid a scenario in which the haircut on debt diverges much from the terms of the July 21 agreement,” the organization said.